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Politics : Ask Michael Burke

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To: Knighty Tin who wrote (97415)	8/30/2002 10:40:15 AM
From: Cynic 2005	Read Replies (3) of 132070

Greenspan Defends Central Bank By MARTIN CRUTSINGER 08/30/2002 09:02:33 EST WASHINGTON (AP) - Federal Reserve Chairman Alan Greenspan said Friday that Fed policy-makers could not have deflated the stock market bubble that emerged in the late 1990s without raising interest rates to such high levels that it would have pushed the country into a severe recession. Greenspan used an address to an annual Fed economic symposium to defend the central bank against critics who have contended that the failure to deflate the high-flying stock market in the late 1990s was a major policy error. Greenspan, who famously warned in December 1996 that investors could be in the grips of "irrational exuberance," said it was very difficult for policy-makers to know when a stock market bubble was developing. And he said even if the Fed felt it should substitute its judgment for the actions of millions of investors, it would be very hard for the central bank to curb stockmarket euphoria. "The notion that a well-timed incremental tightening could have been calibrated to prevent the late 1990s bubble is almost surely an illusion," Greenspan said. MORE siliconinvestor.com But, I think he could surely have raised margin rates.

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